Field Note #66. On "Trading in the Zone"

Source: Mark Douglas, Trading in the Zone Workshop Sessions 1-4, avail. on YouTube

Most traders/investors spend most of their time looking for entry signals, but fail to account for two far more critical pieces of a well-designed trading/investment program: psychological well-being and bank roll management (the two are indeed positively correlated).

These two areas cover a range of topics from prior Field Notes: value of heuristics, avoiding risk of ruin, hedging, interdisciplinary thinking, convexity over analysis (both are important, to be sure, but if you had to choose one, choose convexity over being classically smart), sidestepping the anvil of info overload, and position sizing.

To restate the thesis: psychological state has an outsized impact over technical acumen; and risk management principles--while decidedly less interesting at virtual cocktail parties than selectively parroting views from the latest super hot crypto twitter thread--have an overwhelming impact on trading/investment success. 😅

In a ~5 hr. seminar by Mark Douglas (see also The Disciplined Trader (1990) and Trading in the Zone (2000)), the essence of successful trading/investing is pegged to the above areas.

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